should at least define a clear goal and outline work ethics in
order to ensure a healthy environment and quality of
employment. A simple yet strategic plan should be introduced to ensure the smooth running of operations and
management of the business. Following traditional pathways
and simple techniques strip the business off of a competitive
edge, which is quite essential to thrive in the modern market,
dominated by technological advancements. In order to cut
down on costs and maximize profit, small-scale enterprises
in Bahrain struggle to maintain quality and productivity.
Political changes in Bahrain also have a great influence on
micro and small-scale setups. Owners of micro and
small-scale setups do not have control over the politically
driven increase in costs. Since most of these setups are situated in rural areas, it is difficult to promote innovative
thinking and ideas, hence setting these enterprises back in
terms of modernization and advancement. Having access to
funds and credit is essential for the growth of microenterprises in Bahrain and financial intermediaries pose a challenge to these setups when it comes to providing funding
and capital in form of loans. Even if loans are provided, the
lack of flexibility and underlying assets of the firm being
treated as collateral don’t really help the enterprise grow
(Hayat and Malik 2014).
In Bahrain, SMEs are small, thus, to run them responsibly, it is crucial to meticulously take care of the legal issues.
One of the main issues that seem to prevail among these
small-scale businesses in Bahrain includes handling and
paying taxes. Determining the right amount of taxes to pay is
important, otherwise resulting in fines and even legal charges. Apart from that, even though microenterprises employ a
small number of workforces, issuing proper employee contracts are still essential to protect the company’s as well as
the worker’s interests. These contracts should include payment, termination clauses, rights and responsibilities, and
work ethics and rules. Contracts to deal with unsatisfied
customers should also be taken into consideration to protect
the business from suffering substantial losses. In Bahrain,
small and medium enterprise law is implemented, which
provides support in the development of micro and small
enterprises. Additionally, there are many organizations like
Tamkeen that are working for the development of SMEs in
Bahrain.
Poor people in Bahrain have faced financial service needs
and it is the duty of the microfinance industry to fulfill those
needs. The microfinance industry and SMEs in Bahrain must
have specialized licenses to successfully perform its services. The regulatory and legal framework in Bahrain governs microfinance and creates restrictions that all the
products and services are according to the regulation. There
must be legal relationships between the recipient and the
provider of transactions. The microfinance industry has
faced several regulations in Bahrain such as microfinance
law, the related laws and regulations, implementing administrative regulations and executing administrating agencies
properly organized and staffed. The credit and saving associations which are the informal providers of microfinance
services do not need to register nor are regulated. The
semiformal providers of microfinance services must legally
register them because they are supervised or regulated. The
microfinance industry is also licensed and regulated with the
Ministry of Finance under the Convention Cadre Agreement
(Bahrain Economic Development Bank 2018). The microfinance industry must follow the external reporting rules
such as Dutch GAAP or US GAAP and IFRS. All of the
reporting rules are typical and can be changed with the
passage of time. The microfinance institutions, which take
interest from individuals in their loan amount, have to pay
taxes to the government on the interest amount paid by the
people.
6 Discussion
Microenterprises are crucial to counter the increasing rate of
unemployment and under the light of the evidence provided
by the literature review; essential steps should be taken to
exploit the maximum potential of this set up for growth and
development of Bahrain’s economy. In order to develop and
endorse the establishment of microenterprises, the government needs to provide these business owners with funds in
form of loans in order to encourage them to expand and
grow, creating more job opportunities in the process. With
the ever-evolving industry and technological advancements,
training employees to upgrade their skills and working
methods is more of a necessity than a requirement. It will not
only allow them to compete in bigger markets but will also
provide them with an edge essential for their long-term
sustainability. Bahrain also provides early retirement options
which help to create new opportunities after retirement. The
government of Bahrain also provides subsidies to the SMEs
(Hassan and Kashif 2016). The government should support
this by conducting free training workshops for employees
working at micro and small-scale enterprises to standardize
the setup. Conferences should be conducted to discuss new
ideas and innovative techniques that can, in turn, help
microenterprises grow and develop. The government should
also provide microenterprise owners with incentives to
counter high rent and transportation costs. A major reason
that contributes toward unemployment is the high rate of
illiteracy. To counter this, educational programs should be
introduced to allow everyone to have access to at least basic
level education. Since most of the microenterprise setups are
situated in rural areas, the concept of exploiting traditional
skills and promoting goods and products that are pertinent to
that particular area will not only promote culture but will
An Overview of Bahrain’s Microenterprises Role …
39
order to ensure a healthy environment and quality of
employment. A simple yet strategic plan should be introduced to ensure the smooth running of operations and
management of the business. Following traditional pathways
and simple techniques strip the business off of a competitive
edge, which is quite essential to thrive in the modern market,
dominated by technological advancements. In order to cut
down on costs and maximize profit, small-scale enterprises
in Bahrain struggle to maintain quality and productivity.
Political changes in Bahrain also have a great influence on
micro and small-scale setups. Owners of micro and
small-scale setups do not have control over the politically
driven increase in costs. Since most of these setups are situated in rural areas, it is difficult to promote innovative
thinking and ideas, hence setting these enterprises back in
terms of modernization and advancement. Having access to
funds and credit is essential for the growth of microenterprises in Bahrain and financial intermediaries pose a challenge to these setups when it comes to providing funding
and capital in form of loans. Even if loans are provided, the
lack of flexibility and underlying assets of the firm being
treated as collateral don’t really help the enterprise grow
(Hayat and Malik 2014).
In Bahrain, SMEs are small, thus, to run them responsibly, it is crucial to meticulously take care of the legal issues.
One of the main issues that seem to prevail among these
small-scale businesses in Bahrain includes handling and
paying taxes. Determining the right amount of taxes to pay is
important, otherwise resulting in fines and even legal charges. Apart from that, even though microenterprises employ a
small number of workforces, issuing proper employee contracts are still essential to protect the company’s as well as
the worker’s interests. These contracts should include payment, termination clauses, rights and responsibilities, and
work ethics and rules. Contracts to deal with unsatisfied
customers should also be taken into consideration to protect
the business from suffering substantial losses. In Bahrain,
small and medium enterprise law is implemented, which
provides support in the development of micro and small
enterprises. Additionally, there are many organizations like
Tamkeen that are working for the development of SMEs in
Bahrain.
Poor people in Bahrain have faced financial service needs
and it is the duty of the microfinance industry to fulfill those
needs. The microfinance industry and SMEs in Bahrain must
have specialized licenses to successfully perform its services. The regulatory and legal framework in Bahrain governs microfinance and creates restrictions that all the
products and services are according to the regulation. There
must be legal relationships between the recipient and the
provider of transactions. The microfinance industry has
faced several regulations in Bahrain such as microfinance
law, the related laws and regulations, implementing administrative regulations and executing administrating agencies
properly organized and staffed. The credit and saving associations which are the informal providers of microfinance
services do not need to register nor are regulated. The
semiformal providers of microfinance services must legally
register them because they are supervised or regulated. The
microfinance industry is also licensed and regulated with the
Ministry of Finance under the Convention Cadre Agreement
(Bahrain Economic Development Bank 2018). The microfinance industry must follow the external reporting rules
such as Dutch GAAP or US GAAP and IFRS. All of the
reporting rules are typical and can be changed with the
passage of time. The microfinance institutions, which take
interest from individuals in their loan amount, have to pay
taxes to the government on the interest amount paid by the
people.
6 Discussion
Microenterprises are crucial to counter the increasing rate of
unemployment and under the light of the evidence provided
by the literature review; essential steps should be taken to
exploit the maximum potential of this set up for growth and
development of Bahrain’s economy. In order to develop and
endorse the establishment of microenterprises, the government needs to provide these business owners with funds in
form of loans in order to encourage them to expand and
grow, creating more job opportunities in the process. With
the ever-evolving industry and technological advancements,
training employees to upgrade their skills and working
methods is more of a necessity than a requirement. It will not
only allow them to compete in bigger markets but will also
provide them with an edge essential for their long-term
sustainability. Bahrain also provides early retirement options
which help to create new opportunities after retirement. The
government of Bahrain also provides subsidies to the SMEs
(Hassan and Kashif 2016). The government should support
this by conducting free training workshops for employees
working at micro and small-scale enterprises to standardize
the setup. Conferences should be conducted to discuss new
ideas and innovative techniques that can, in turn, help
microenterprises grow and develop. The government should
also provide microenterprise owners with incentives to
counter high rent and transportation costs. A major reason
that contributes toward unemployment is the high rate of
illiteracy. To counter this, educational programs should be
introduced to allow everyone to have access to at least basic
level education. Since most of the microenterprise setups are
situated in rural areas, the concept of exploiting traditional
skills and promoting goods and products that are pertinent to
that particular area will not only promote culture but will
An Overview of Bahrain’s Microenterprises Role …
39